In this case, insurance brokerage USI infringed copyright law by using client proposal templates from Graham, an insurance brokerage firm that provides property and casualty insurance services to businesses.

Background

Thomas Haughey worked for Graham as a producer—serving as an intermediary between clients and insurance companies—until 1991, according to the court opinion. Graham’s president, William Graham, developed a template called the Standard Works to be used by producers for client-specific proposals.

After Haughey left the firm, he continued to use the Standard Works, distributing it to employees at his new employer, insurance brokerage firm Flanigan, O’Hara & Gentry (FOG). In 1995, FOG was acquired by USI Holdings, and the Standard Works were made available to USI employees. Graham did not discover USI’s infringement until November 2004, when a client showed one of Graham’s producers a copy of a USI proposal to the client.

The Case

The Copyright Act only allows a three-year window for civil action—however, in this case, Graham said it discovered the infringement within three years of bringing suit. The court had to decide whether the three years count from the discovery of a copyright infringement, rather than the actual infringement.

The District Court concluded that the discovery rule applied to civil actions under the Copyright Act, and the case proceeded to a jury trial, according to the court opinion. The jury concluded that Graham’s infringement claims were not time-barred and awarded him $16.6 million against USI and another $2.3 million against Haughey.

However, a district court overturned that finding, ruling that Graham was time-barred from recovering for acts of infringement that occurred more than three years before it filed suit.

The case went to a second jury trial for damages for the three-year before Graham’s filing, and Graham was awarded $1.4 million against USI and $268,000 against Hauhney.

Last week, the 3rd Circuit Court of Appeals reversed the district court’s ruling, saying that the court erred in ruling that Graham’s claims were time-barred. The court is sending the case back to the district court to reconsider.

The case is William A. Graham Company d/b/a The Graham Company v. Thomas P. Haughney; USI MidAtlantic Inc., No. 08-2007.